What Media Crisis?

Certain media conglomerates may be in trouble, but the industry as a whole is hardly sliding into oblivion.

While a world standing on the edge of financial ruin merited a full-court press in search of least some kind of lifeline to stabilize the global economy at the recent G8 and G20 meetings, there has also been another crisis unfolding – a crisis of the media – that has pundits and scribblers everywhere fretting over the “future of the media” and scrambling to discover the industry’s “next top model.”

Many argue that the steady onslaught of the internet and declining advertising revenues have created a crisis for the media, and journalism especially. Canwest exemplifies such conditions in Canada, but worldwide several bastions of the “old order” have subsequently been restructured (Bertelsmann, Cogeco), dismantled (AT&T, Vivendi), gone bankrupt (Canwest, Craig, Knight Ridder, Media News, Tribune, Kirch, TQS), or abandoned early visions of convergence altogether (Bell Globemedia, Time Warner). Even the New York Times and France’s venerated Le Monde have been forced to search out new benefactors. Conditions in Canada are unique, but the dynamics are global, and one thing in common everywhere is that a feeble press is a dangerous thing for democracy.

To be sure, there is no shortage of examples that seem to prove that the media in Canada are “in crisis”:

• Canwest and CTVglobemedia closed several TV stations in 2009.
• TQS, the second private French-language TV network, went bankrupt in 2008 and was sold the next year.
• The CBC’s advertising revenue dropped in 2007-2008.
• Private conventional TV profits fell to zero in 2008.
• Several newspapers – the National Post, the Recorder in Brockville, the Chatham Daily News, and the Daily Observer in Pembroke – pared back their publishing schedule from six days a week to five.
• A slew of lay offs at CityTV in 2009/10 (140 jobs), CTVglobemedia in 2009 (248 jobs), and Canwest in 2008-9 (1,900 jobs).

I fully agree that the media are in a heightened state of flux, but instead of blaming the internet, I see the current woes facing some media outlets as mainly reflecting a short-term, cyclical decline in advertising revenue caused by the economic downturn and the accumulated results of two waves of consolidation that transformed the media industries between 1995 and 2000 and again from 2003 to 2007. The results, paradoxically, have been greater media concentration but also bloated media conglomerates that have sometimes stumbled badly and occasionally been brought to their knees by the two global financial crises of the 21st century.

The Growing Network Media Economy

It is one thing to see the media industries as facing tumultuous times, but something else altogether to see these conditions as cataclysmic. In reality, the media industries have grown immensely in the past 25 years. The network media economy (consisiting of television, cable and satellite distribution, radio, magazines, newspapers, internet access, and internet advertising) expanded from $12.2 billion in 1984 to $32 billion in 2008 (in real dollar terms, using 2010 as the base year).

Claims that television is in desperate straights – remember the “save local tv” ad-wars? – involve a sleight of hand that typically highlights the relative decline of conventional advertising-supported television, where profits fell from 11 per cent in 2005, to five per cent in 2007, to zero in 2008. Over the long run, however, profits have been between 10 and 15 per cent for the past decade. Moreover, the television universe has expanded immensely to include new distribution channels, cable and satellite services, pay-per-view, video-on-demand, the internet, and so on. There were 48 cable and satellite television services in 2000; today there are 189. Indeed, the television universe doubled in size between 1984 and 2000, and then grew to a $14 billion industry in 2008. Operating profits for specialty and pay television services as well as cable and satellite distributors like Rogers and Shaw have been a rich 21 per cent to 25 per cent every year since 2002 – two-and-a-half times the level of Canadian industry on average and matched only by banking (25.2 per cent), alcohol and tobacco (23.6 per cent), and real estate (20.9 per cent). Television is, thus, not in crisis, but a goldmine!